<\/p>\n
Kohl\u2019s continues to struggle to capture consumer spending as department store chains nationwide see weaker demand. Amid this trend, Kohl\u2019s is introducing major in-store changes to regain customers after its sales and earnings have failed to meaningfully improve in recent months.\u00a0<\/p>\n
In the first quarter of 2026, Kohl\u2019s saw its comparable sales decrease by roughly 1% year over year, while its operating income declined by about 23%, according to its latest earnings report. Also, the company suffered a net loss of $14 million during the quarter.\u00a0<\/p>\n
A recent Placer.ai report revealed that overall customer visits to Kohl\u2019s stores during the quarter declined by 4.6% year over year.\u00a0<\/p>\n
Lila Margalit, Placer.ai content manager, wrote in the report that the department store industry is an \u201can increasingly bifurcated sector.\u201d<\/p>\n
\u201cDepartment store performance in Q1 2026 reflected today\u2019s increasingly bifurcated landscape, where premium, experience-driven retailers continue to draw shoppers even amid broader caution, while mid-market chains remain more exposed to macro pressure,\u201d wrote Margalit.<\/p>\n
\u201cEven in a constrained environment, consumers are still willing to show up for brands that offer a clear, compelling experience \u2013 but that bar is rising, making it harder for less differentiated players to keep up,\u201d she continued.\u00a0<\/p>\n
Kohl\u2019s CEO reveals where customers are pulling back spending<\/p>\n
During an earnings call on May 28, Kohl\u2019s CEO Michael Bender said that the company is \u201cnot satisfied\u201d with its current standing in retail.\u00a0<\/p>\n
\u201cWe are not satisfied with where we are,\u201d said Bender. \u201cWe need to continue to show up for our customers every day as they continue to put an importance on value and remain under financial pressure.\u201d<\/p>\n
He said categories that underperformed during the first quarter include its Sephora at Kohl’s, mens and footwear businesses. Its accessories category also saw flat sales growth.<\/p>\n
Kohl\u2019s Chief Financial Officer Jill Timm said during the call that core customers are continuing to pull back on spending. This comes as many consumers nationwide are struggling to navigate inflation, high gas prices, and declining housing affordability.\u00a0<\/p>\n
\u201cWe continue to see choiceful discretionary spending from our core low-to middle-income consumer as they remain financially pressured,\u201d said Timm.\u00a0<\/p>\n
This pattern among shoppers doesn\u2019t come as a surprise as many have been putting discretionary spending on the chopping block amid economic pressures, a recent survey from A&M Consumer and Retail Group found.<\/p>\n
How U.S. shoppers are reducing clothing, footwear and beauty spending:Nearly half of U.S. consumers (48%) are spending less on apparel spending, while 22% are making value a top priority.Among those reducing clothing and footwear spending, 49% are buying fewer items overall. Another 32% are leveraging sales and promotions, while 25% are curbing impulse purchases.Changes in budget and income were cited by 50% of consumers as a key reason for cutting apparel and footwear spending. An equal share pointed to higher prices and a lack of compelling promotions.Beauty spending is also under pressure. About 35% are buying fewer beauty products, while 65% are switching differentbrands and retailers to save money.
\nSource: A&M Consumer and Retail Group<\/p>\n
In a press release, Chad Lusk, managing director at A&M Consumer and Retail Group, said that consumers are \u201cmaking thoughtful tradeoffs\u201d as they\u2019re \u201ccutting back on volume and dramatically changing shopping routines to stretch their wallets.\u201d<\/p>\n
\u201cConsumers are re-orienting the importance of brand in their decision-making, and loyalty is waning,\u201d said Lusk. \u201cThat\u2019s not to say branded products cannot win \u2013 of course they can. But consumers are focusing less on the logo and more on the attributes that define the product.\u201d\u00a0<\/p>\n
\u201cIt\u2019s more important than ever for brands to align their value propositions with what is actually creating purchase intent, and to continually give consumers reasons to buy. Brand reputation alone will not be enough,\u201d he continued.<\/p>\n
Kohl’s shifts gears after it sees a roughly 1% year-over-year drop in comparable sales in the first quarter of 2026. <\/p>\n
Shutterstock<\/p>\n
Kohl\u2019s hopes new in-store changes will win back customers<\/p>\n
In response to shifting customer behavior, Bender is betting big on three key initiatives to reverse Kohl\u2019s declining sales.\u00a0<\/p>\n
First, he said that the company will be doubling down on offering a \u201cmore curated balanced assortment.\u201d<\/p>\n
\u201cAt the onset of this work, our product offering has become overly saturated in certain products and categories, leading to unintentional lost sales with our core loyalist customers,\u201d said Bender.\u00a0\u00a0<\/p>\n
\u201cWe immediately began making improvements to our assortment offerings by reducing our redundancy and choice counts from market brands and reintroducing products in lost categories such as petites and fine jewelry,\u201d he continued.<\/p>\n
Some of these changes include expanding Kohl\u2019s fine jewelry offerings to an additional 350 stores. Additionally, it will be rolling out a new line of fashion and hair accessories under the company\u2019s proprietary SO brand.<\/p>\n
\u201cThese accessory fixtures will be placed in the juniors department to inspire customers to complete their looks with trending value-priced accessories,\u201d said Bender.<\/p>\n
Related: Kohl\u2019s makes bold store change to lure back customers<\/p>\n
Kohl’s expands Sephora offerings, cleans up stores<\/p>\n
Also, the company will focus on \u201ccurating a portfolio of new and emerging brands\u201d within its Sephora at Kohl’s business.\u00a0<\/p>\n
\u201cWe’re expanding our makeup offering, having successfully launched MAC in March, which is resonating well with customers and is scheduled for a full-store rollout later this year,\u201d said Bender. \u201cIn skincare, we’re rolling out newness with trending Korean brands like Beauty of Joseon, Aestura, and Biodance.\u201d\u00a0<\/p>\n
He also said that Kohl\u2019s will be making edits to improve \u201cassortment clarity and reduce redundancy\u201d in its men’s business. This includes making proprietary brands its \u201ccore business driver with complementary key national brands to help offer a clear, good, better, best offering.\u201d<\/p>\n
It will also launch Brixton, a modern lifestyle brand, across 300 stores in July, which the company expects to further benefit the category.\u00a0<\/p>\n
Bender also said that Kohl\u2019s will be adding \u201cnewness\u201d within its footwear business.<\/p>\n
\u201cThis includes newness in key active brands like Nike, highlighting their V5 Runner and Court Vision low sneakers and Adidas,\u201d he said. \u201cWe are servicing our casual footwear and with proprietary brands like Apartment 9 and men’s and LC in women’s.\u201d<\/p>\n
Kohl\u2019s doubles down on offering value to customers<\/p>\n
The second initiative the company will focus on, according to Bender, is \u201creestablishing Kohl’s as a leader in value and quality.\u201d<\/p>\n
\u201cIn today’s macro economy, it’s a necessity for the low-to middle-income consumers that we serve,\u201d he said. \u201cWe continue to seek value in an attempt to stretch their dollars for themselves and their family when more of their money is being spent on essentials like food and gas.\u201d<\/p>\n
He said that Kohl\u2019s began increasing the number of brands eligible for coupon usage last year and will continue to do so after seeing more customers use coupons to make purchases.\u00a0<\/p>\n
Bender also said that leveraging the company\u2019s proprietary brands is the \u201cmost impactful way\u201d to improve value offerings. Additionally, Kohl\u2019s will expand its \u201cimpulse category,\u201d which includes low-cost items that are strategically placed at its checkout section.<\/p>\n
Bender said that Kohl\u2019s Deal Bar, which offers items for seasonal decor and gifting for under $10, and its toy towers, which includes toys priced at $4.99, $7.99 and $9.99, have \u201cexceeded our initial expectations as value continues to resonate with our customers.\u201d<\/p>\n
Kohl\u2019s plans to fix a significant inventory problem<\/p>\n
The third initiative Kohl\u2019s plans to focus on is \u201cenhancing\u201d its omnichannel platform to \u201ccreate a frictionless shopping experience\u201d for customers. Bender said that a key part of this strategy includes improving its Trip Assurance promise, which ensures that key merchandise is consistently in stock.\u00a0<\/p>\n
Bender admitted that Kohl\u2019s has let customers down by not fulfilling this promise like it has done so in the past.\u00a0<\/p>\n
\u201cTrip Assurance needs to be a key differentiator for us going forward,\u201d he said. \u201cSimply put, the customer needs to be able to come to Kohl’s, find what they’re looking for in the size and color they want and get it at an affordable price. To better achieve this, we’re planning our apparel depth up high single digits and conversely planning our choice counts down high single digits.\u201d<\/p>\n
More Retail:<\/p>\n
Target sees unexpected shift in customer behaviorPublix faces consumer boycott threat after store policy changeRoss Stores CEO eyes a change that could drive away shoppers<\/p>\n
Kohl\u2019s will also be leveraging artificial intelligence to \u201cmodernize and enhance\u201d shopping experiences. Additionally, it be expanding its digital marketplace offerings.\u00a0<\/p>\n
\u201cThis year, we are planning to more than double our current offering of marketplace items on our website,\u201d said Bender.\u00a0 \u201cWhile still early in its growth and maturity curve, our marketplace strategy has become a more meaningful part of the business.\u00a0<\/p>\n
\u201cWe believe this creates an opportunity to attract and convert more customers by expanding our assortment into white space categories that complement our core offering,\u201d he added.<\/p>\n
As Kohl\u2019s plans to focus on these three initiatives, it expects its net and comparable sales growth to either decrease by 2% year-over-year or remain flat.\u00a0<\/p>\n
\u201cWhile we are pleased with the start to the second quarter, and we believe that our strategic initiatives will allow us to continue making progressive improvement throughout the year, we want to be mindful of the current macroeconomic environment we are operating in,\u201d said Timm during the call.\u00a0<\/p>\n
Related: Ross Stores CEO doubles down on change that may deter customers<\/p>\n
#Kohls #scrambles #restore #customer #loyalty #major #loss<\/p>\n","protected":false},"excerpt":{"rendered":"
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